AFP: Iranian President Mohammad Khatami has postponed a visit to Turkey after the conservative-controlled parliament threw into doubt two major contracts signed with Turkish companies, an official said. AFP

TEHRAN - Iranian President Mohammad Khatami has postponed a visit to Turkey after the conservative-controlled parliament threw into doubt two major contracts signed with Turkish companies, an official said.

The reformist president's visit, scheduled for Tuesday, "has been postponed until we reach an agreement inside Iran on these contracts, so that then we can agree with the outside world," goverment spokesman Abdollah Ramazanzadeh told AFP.

Khatami's political rivals in parliament earlier Sunday passed a bill giving them veto power over an airport operating contract signed with a Turkish-led consortium and a deal signed with Turkcell, Turkey's biggest mobile phone operator, to set up the first Iranian private mobile phone network.

The parliament, or Majlis, had given preliminary approval to a bill giving it a veto power on all major foreign investment contracts, but watered down the bill during its final reading Sunday.

But Ramazanzadeh said this was "insufficient".

"The government is still hostile to this law," he said.

Turkcell was awarded the contract in a tender in February to become -- under the name Irancell -- Iran's second mobile phone operator. The deal is conditional on the payment of a 300-million-euro (366-million-dollar) licence fee.

The company would be expected to invest up to three billion dollars in the project, which would rank among the largest foreign investments in Iran since the Islamic revolution 25 years ago.

Hardliners have argued that having a telephone network run by a foreign company is contrary to national security, and could facilitate phone tapping or suspension of the service.

The parliament bill also targets a 200-million-dollar contract with Tepe-Akfen-Vie (TAV) -- an Turkish-Austrian consortium -- for construction and operations at Imam Khomeini International Airport, a new airport to serve the Iranian capital.

In May, Iran's hardline Revolutionary Guards shut down the new airport, arguing that the contract with TAV endangered the Islamic republic's security because the operators also had business dealings with Israel.

Hardliners and conservatives took control of the Iranian parliament after most reformists and moderates loyal to the government were barred from standing in February's polls.

The dispute over the deals overshadowed a visit to Iran in August by Turkish Prime Minister Recep Tayyip Erdogan, who left here having failed to ease the way for the deals to go ahead.

The bill is the latest twist in a bitter power struggle between Iranian reformists and hardliners. The previous parliament, controlled by Khatami supporters, had pushed through legislation seeking to streamline foreign investment procedures.

Iran's Transport Minister Ahmad Khorram has defended the 200-million-dollar TAV contract, and blamed the hardliners who he said want to "close the door on foreign investment".

But he has been formally summoned by the Majlis for an impeachment hearing on October 3. He is accused of showing "unnecessary inclination towards foreign companies".

Another minister has warned that annulling such contracts could land Iran in international tribunals, while the government has warned that foreign investment activity here -- already strictly controlled -- could fall.

"It will paralyse the work of the government. It will discourage foreigners from investing in Iran. This will cost the country billions of dollars," President Khatami warned last week.

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